Highly compensated participants in a plan that fails coverage or nondiscrimination requirements for a plan year face more serious tax consequences than if the plan is disqualified for another issue. Furthermore, such qualification failures are demographic failures, and are not eligible for self-correction under EPCRS, the IRS correction program.
A new Technical Update from SunGard Relius explains how to make a retroactive corrective amendment under Treas. Reg. §1.401(a)(4)-11(g) — a.k.a. an “11(g) correction.” The regulations provide a 9-1/2 month window after the close of the plan year to make a such a corrective amendment. Using a step-by-step approach, the SunGard update lays out the 11(g) correction process in an easy-to-understand way.
